Stock Analysis

If EPS Growth Is Important To You, ViTrox Corporation Berhad (KLSE:VITROX) Presents An Opportunity

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Investors are often guided by the idea of discovering 'the next big thing', even if that means buying 'story stocks' without any revenue, let alone profit. Unfortunately, these high risk investments often have little probability of ever paying off, and many investors pay a price to learn their lesson. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

In contrast to all that, many investors prefer to focus on companies like ViTrox Corporation Berhad (KLSE:VITROX), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide ViTrox Corporation Berhad with the means to add long-term value to shareholders.

See our latest analysis for ViTrox Corporation Berhad

How Fast Is ViTrox Corporation Berhad Growing?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. It certainly is nice to see that ViTrox Corporation Berhad has managed to grow EPS by 29% per year over three years. If growth like this continues on into the future, then shareholders will have plenty to smile about.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. ViTrox Corporation Berhad shareholders can take confidence from the fact that EBIT margins are up from 39% to 42%, and revenue is growing. Ticking those two boxes is a good sign of growth, in our book.

The chart below shows how the company's bottom and top lines have progressed over time. For finer detail, click on the image.

KLSE:VITROX Earnings and Revenue History January 29th 2023

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of ViTrox Corporation Berhad's forecast profits?

Are ViTrox Corporation Berhad Insiders Aligned With All Shareholders?

Many consider high insider ownership to be a strong sign of alignment between the leaders of a company and the ordinary shareholders. So as you can imagine, the fact that ViTrox Corporation Berhad insiders own a significant number of shares certainly is appealing. In fact, they own 68% of the company, so they will share in the same delights and challenges experienced by the ordinary shareholders. This makes it apparent they will be incentivised to plan for the long term - a positive for shareholders with a sit and hold strategy. This insider holding amounts to This is an incredible endorsement from them.

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations between RM4.2b and RM14b, like ViTrox Corporation Berhad, the median CEO pay is around RM1.9m.

The ViTrox Corporation Berhad CEO received total compensation of just RM431k in the year to December 2021. That's clearly well below average, so at a glance that arrangement seems generous to shareholders and points to a modest remuneration culture. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is ViTrox Corporation Berhad Worth Keeping An Eye On?

You can't deny that ViTrox Corporation Berhad has grown its earnings per share at a very impressive rate. That's attractive. If you need more convincing beyond that EPS growth rate, don't forget about the reasonable remuneration and the high insider ownership. The overarching message here is that ViTrox Corporation Berhad has underlying strengths that make it worth a look at. Now, you could try to make up your mind on ViTrox Corporation Berhad by focusing on just these factors, or you could also consider how its price-to-earnings ratio compares to other companies in its industry.

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Valuation is complex, but we're helping make it simple.

Find out whether ViTrox Corporation Berhad is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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